Industry News

Property rights revolt sweeps nation

August 26, 2005

Eminent domain decision prompts California legislation

By Glenn Roberts Jr. Inman News

California legislators are considering two laws that relate to eminent domain seizure of private property, in the wake of the controversial 5-4 U.S. Supreme Court decision (Kelo v. New London) in June that backed the authority of a municipality to buy up and tear down homes to make way for a redevelopment project.

One of the bills, Assembly Bill 590, was first proposed in February as a housing-discrimination measure but was radically amended in July as primarily a bill relating to eminent domain laws.

This bill provides that, while eminent domain may be exercised to acquire property only for a public use, "In the exercise of eminent domain, 'public use' does not include the taking or damaging of property for private use, including, but not limited to, the condemnation of non-blighted property for private business development."

On Aug. 15 the bill was re-referred for consideration by a Housing and Community Development committee.

The other bill, Senate Constitutional Amendment 15, would provide that private property "may be taken or damaged only for a stated public use. The measure would also require that the property be owned and occupied by the condemnor, except as specified, and used only for the stated public use."

If the property "ceases to be used for the stated public use, the former owner, or a beneficiary or an heir who has been designated for this purpose, would have the right to reacquire the property for its fair market value before the property may be otherwise sold or transferred," the legislation also states.

This measure, which requires a two-thirds majority vote, was re-referred to the Senate Rules Committee on Tuesday.

The California Association of Realtors has reportedly not yet taken a position on the proposed measures.

Ron Kingston, a lobbyist for the state association, said, "Some local redevelopment agencies have become very aggressive in condemning property in eminent domain proceedings, but the high court's ruling is still too fresh and too complex an issue," according to a report in Realtor Magazine, a publication of the National Association of Realtors trade group.

The national association is planning to host a session at its upcoming annual conference titled, "Eminent Domain: How to protect property rights after Kelo." And the association considers private property rights to be the "cornerstone of the real estate industry."

He added, "It's unfamiliar territory and we don't need to respond this quickly."

Legislators in several other states have also pitched bills to limit municipalities' eminent domain authority.

Earlier this month, Alabama Gov. Bob Riley signed a state law that strengthens private property rights by prohibiting state or local governments from "condemning private property in non-blighted areas for the purpose of retail, commercial, industrial, office or residential development," according to an Aug. 3 announcement.

"A property rights revolt is sweeping the nation and Alabama is leading it," Riley said in a statement about the new state law. The announcement states that at least eight other states passed laws, before the Supreme Court's ruling, that prevented the use of eminent domain for economic development unless it is used to eliminate blight.